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RSI-14 with Simple Moving Average 5-period of RSI attached.

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Previous Post (1/25): GBP/JPY's Bearish Targets

- The GBP/JPY was supported at 129.50 as expected, and the market rallied back to the origin of the broken diagonal triangle.
- The RSI has resolved the oversold condition, but should not break above 60 in healthy bearish trend.
- The market is now testing 130.50, with 130.60 as 38.2% retracement and 130.65 as an important resistance pivot.
- For me the bearish scenario is slightly suspect until the break below 129.30 area.
- The bullish outlook is also limited to the possibility it is just a correction to the decline, with maximum target 131.25 (61.8% retracement) if the market can break above 130.65.
- In fact if the market is starting a bearish trend, the 130.65 level should not be broken because it might be the end of wave (1), which should not be overlapped by wave (4), which we could be in now.
- Then a decline that breaks below the current low (61.8%, 38.2% retracement + 200SMA in 4H chart) can be in the near-term projected to 128.70, and might extend to the next fibonacci cluster of 100% and 61.8%, near the 128.00 psychological support.
- Then we would anticipate another correction rally after this 5-wave decline. A decline after the correction breaking below 128.00 then targets 126.50 and 125.55.
- The bullish scenario does not have be considered unless the market breaks above 131.25.


Is the GBP/JPY in a bearish trend, or is this a correction decline? We would love to hear from you.
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Fan Yang CMT
Chief Technical Strategist